Correlation Between Ford and Surge Battery
Can any of the company-specific risk be diversified away by investing in both Ford and Surge Battery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Surge Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Surge Battery Metals, you can compare the effects of market volatilities on Ford and Surge Battery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Surge Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Surge Battery.
Diversification Opportunities for Ford and Surge Battery
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Surge is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Surge Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Battery Metals and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Surge Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Battery Metals has no effect on the direction of Ford i.e., Ford and Surge Battery go up and down completely randomly.
Pair Corralation between Ford and Surge Battery
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.56 times more return on investment than Surge Battery. However, Ford Motor is 1.78 times less risky than Surge Battery. It trades about 0.06 of its potential returns per unit of risk. Surge Battery Metals is currently generating about -0.12 per unit of risk. If you would invest 992.00 in Ford Motor on November 5, 2024 and sell it today you would earn a total of 16.00 from holding Ford Motor or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ford Motor vs. Surge Battery Metals
Performance |
| Timeline |
| Ford Motor |
| Surge Battery Metals |
Ford and Surge Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Surge Battery
The main advantage of trading using opposite Ford and Surge Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Surge Battery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Surge Battery will offset losses from the drop in Surge Battery's long position.The idea behind Ford Motor and Surge Battery Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Surge Battery vs. Nevada Sunrise Gold | Surge Battery vs. Critical Elements | Surge Battery vs. Lithium Ionic Corp | Surge Battery vs. Green Technology Metals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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